Week 09 ยท Introduction to Marketing
Davood Wadi, PhD
Welcome to Week 9.
Today we explore the Third P: Place.
We will unpack how products move from production to consumption.
A marketing channel is a set of interdependent organizations.
These organizations help make a product available for use or consumption.
They bridge the gap between producers and users in terms of time, place, and possession.
Marketing channels are part of a larger value delivery network.
This network includes the company, suppliers, distributors, and customers.
Everyone partners to improve the performance of the entire system.
A grocery chain, the bakery that supplies it, the distributor that carries the bread, and the shoppers who buy it all share their forecasts so that fewer loaves are wasted. What is the larger whole they form?
Intermediaries offer the firm more than it can achieve on its own.
They provide contacts, experience, specialization, and scale of operation.
They transform the assortments of products made by producers into the assortments wanted by consumers.
Information gathering about consumers and competitors.
Promotion development and dissemination about an offer.
Contacting prospective buyers and matching offers to meet buyer needs.
Negotiating price and other terms so that ownership can be transferred.
Physical distribution of goods.
Financing the channel work and taking risks of carrying out the channel work.
A channel level is a layer of intermediaries that performs some work in bringing the product closer to the final buyer.
The number of intermediary levels indicates the length of a channel.
Direct marketing channels have no intermediary levels.
Indirect marketing channels contain one or more intermediary levels.
Common levels include wholesalers, jobbers, and retailers.
More levels mean less control and greater channel complexity for the producer.
Two producers sell the same snack. The first ships to shoppers from its own website. The second sells to a wholesaler, who sells to a retailer, who sells to shoppers. What is true of the second producer's channel?
Discussion: If you were launching a new organic snack brand, would you sell directly through your website or pitch to a major grocery chain?
Distribution channels are complex behavioral systems.
People and companies interact to accomplish individual, company, and channel goals.
Success depends on how well the channel members work together.
Channel conflict occurs when members disagree over goals, roles, and rewards.
Horizontal conflict occurs among firms at the same level of the channel.
Vertical conflict occurs between different levels of the same channel.
Two dealerships that both sell the same carmaker's vehicles argue over which of them is allowed to advertise in the other's city. Which kind of channel conflict is this?
Consist of one or more independent producers, wholesalers, and retailers.
Each is a separate business seeking to maximize its own profits.
No channel member has much control over the other members.
A VMS consists of producers, wholesalers, and retailers acting as a unified system.
One channel member owns the others, has contracts with them, or wields so much power they all cooperate.
Designed to achieve channel economies and maximum impact.
Corporate VMS integrates successive stages of production and distribution under single ownership.
Contractual VMS consists of independent firms at different levels joining together through contracts.
Administered VMS coordinates successive stages through the size and power of one of the parties.
A single firm sets up two or more marketing channels to reach one or more customer segments.
Offers advantages for companies facing large and complex markets.
Expands sales and market coverage but can be harder to control and generate conflict.
Disintermediation occurs when product and service producers cut out intermediaries.
This includes going directly to final buyers or displacing traditional resellers with new types of intermediaries.
Presents both opportunities and strategic threats to established firms.
A furniture maker closes the dealer accounts it has sold through for years and begins taking orders only on its own website. Which trend does this show?
Discussion: As streaming services bypass traditional cable providers, how can cable companies adapt to remain relevant in the distribution channel?
Retailing includes all activities involved in selling goods directly to final consumers.
Wholesaling includes all activities involved in selling goods to those buying for resale or business use.
Logistics management ensures the efficient flow of materials and final goods.
Retailers connect brands with consumers in the final steps of the distribution process.
Shopper marketing focuses the entire marketing process on turning shoppers into buyers at the point of sale.
Retailers must carefully define their target markets and positioning.
Wholesalers add value by performing channel functions better or more cost effectively than producers.
They help manufacturers reach many small customers at a low cost.
They hold inventories, reducing inventory costs and risks to suppliers and customers.
Marketing logistics involves planning, implementing, and controlling the physical flow of goods.
Focuses on getting the right product to the right customer in the right place at the right time.
Involves inbound distribution, outbound distribution, and reverse distribution.
Managing upstream and downstream value-added flows of materials, final goods, and related information.
Aims to maximize customer service while minimizing distribution costs.
Major functions include warehousing, inventory management, transportation, and logistics information management.
Outsourcing logistics functions to third-party providers.
3PL providers can help companies save money, improve service, and focus on core competencies.
They understand increasingly complex logistics environments.
Distribution channels are the critical link between producers and final consumers.
Choosing the right channel structure balances control, coverage, and cost.
Effective channel management and logistics create sustainable competitive advantages.